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Markets treading water ahead of string of earnings reports

Equity markets struggled to find direction at the start of the week with little market-moving news and few corporate earnings to give direction. Earnings season comes into full swing on Tuesday with a large number of companies reporting first-quarter figures on both sides of the Atlantic. In addition to Switzerland’s UBS, healthcare company Novartis and foods giant Nestlé, US tech companies Microsoft and Alphabet report first-quarter earnings later on Tuesday.

Shane Strowmatt, LGT
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Earnings at UBS, which acquired crisis-ridden rival Credit Suisse just last month, plummeted in the first quarter due to provisions set aside for litigation dating back more than a decade. Net profit attributable to shareholders came in at 1.03 billion US dollars, down from 2.14 billion dollars in the same period a year earlier. Switzerland’s largest bank said Tuesday it had put aside 665 million dollars to settle a case related to US mortgage-backed securities, which it hopes to resolve with US authorities soon.

Germany’s ifo Business climate Index improved a bit in April, rising to 93.6 points from 93.2 in March in seasonally adjusted terms. While companies’ expectations for the future improved, German businesses’ assessments of the current situation worsened, the Munich-based ifo Institute said Monday. European markets barely moved on the day, with Germany’s DAX and the STOXX Europe 600 finishing nearly flat on Monday. Also in Europe, luxury goods company LVMH, which is the parent company of names such as Louis Vuitton and Bulgari, became the first European company to break a market value of more than 500 billion US dollars on Monday. The stock ended the day just slightly in positive territory.

Equity markets in New York also continued to trade sideways on Monday with the Dow Jones Industrial gaining 0.2% to end the day at 33,875.40 points and the S&P 500 losing 0.09% to close at 4,137.04 points. On the Nasdaq, the major tech indices also fell slightly.

Stock markets in Asia were sliding on Tuesday ahead of the mass of earnings reports due later in the day. Hong Kong’s Hang Seng Index slipped 1.62% and the Hang Seng Tech index dropped 3.46%. In mainland China, the Shanghai Composite was down 1.54% and the Shenzhen Component fell 0.35%. South Korea’s Kospi also fell 1.82%, while Japan’s Nikkei was the notable exception, gaining 0.2%.

Investors get an update on the state of the tech industry this week as first-quarter figures are released by Microsoft and Google (Tuesday) as well as Meta (Wednesday) and Amazon (Thursday). Market participants will likely focus on the effects of mass layoffs in the industry and their impact on companies’ bottom lines. Additionally, the tech firms are expected to update the public on their artificial intelligence projects, a hot topic since OpenAI released chatbot ChatGPT in late 2022. Particularly interesting to investors would be any insight into plans to monetize the technology.

Corporate news in focus: Q1 figures from ABB, UBS, Novartis, Nestlé, Pepsi, UPS, GE, McDonald’s, Verizon, Microsoft and Alphabet.

Economic data in focus: Swiss trade balance for March (08:00 CET), US new home sales for March (16:00), US consumer confidence for April (16:00), Richmond Fed manufacturing index (16:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi,
Source: LGT Bank (Switzerland) Ltd.

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